NHL Season on the line this week

The chances for this year’s full NHL season enters the final shift down a goal this week. Ironically, both sides are losing by a goal. The buzzer will ring on October 25, 2012. While significant gaps in demands for shares of revenue sharing preceded the owners’ lockout of NHL players September 15th, the NHL owners have stepped forward and proposed a 50-50 split of hockey related revenues and a full 82 game season beginning November 2nd.

Fans and commentators are wondering why it took so long to get to this point. Didn’t everyone know that 50-50 is where the two sides would settle all along? Hockey fans should start planning on watching hockey in 2012 now, right? Not so fast.

At first blush, a 50-50 split would seem fair to players. However, Donald Fehr, executive director of the NHL Players Association, wrote, “Simply put, the owners’ new proposal, while not as Draconian as their previous proposals, still represents enormous reductions in player salaries and individual contracting rights. As you will see, at 5 per cent industry growth rate the owners predict, the salary reduction over six years exceeds $1.6 billion. What do the owners offer in return?”

The players’ initial reaction to the owners’ proposal wasn’t encouraging. The NHL owners’ deadline to reach a new collective bargaining agreement and play a full 82 game schedule ends October 25th. So where are negotiations at right now?

The players made three counters proposals last week in Toronto, but all were summarily rejected by the owners within 15 minutes. The first two proposals involved asking for slightly higher revenue splits for players and phasing in a 50-50 split over a period of years. The third counter proposal was the most interesting and agreed to a 50-50 split of revenues going forward, however inserted a caveat that existing contracts would count only 87% against the cap, and 13% would be paid, but not count against the salary cap.

It should be noted that the NHL’s new offer allows NHL teams to spend to the “old” salary cap level in the 2012-12 season, approximately $70 million per team. In year two of the new CBA, the teams would be required to cap salaries at 50% of revenues. That year two cap would be approximately $63 million, assuming a 5% growth rate of hockey related revenues.

The main obstacle in reaching an agreement is the issue of already existing contracts. The players want existing contracts to be paid in full, while the owners want players’ share of revenue reduced immediately. From all reports on the negotiations, it appears that existing player contracts will be paid in full. However, unsigned players will have less of the revenue pie to obtain salary. This can essentially be seen as requesting a larger revenue share by the players. How much more is unknown, remember that teams can spend up to the 57% revenue share figure in the first year.

Who’s to blame in this mess? Fan’s venom toward the work stoppage has flowed both ways, with both players and owners maneuvering win the public relations battle, but remember this, the owners locked the players out and canceled games, while the players offered to play under the status quo.

What is infuriating to hockey fans is that the owners and players continue to argue over terms, despite being very close to reaching an agreement, while the hockey season is precariously close to slipping away. With 3.3 billion dollars in annual revenue, each percentage point of hockey related revenue equated to $33 million dollars. For weeks the players and owners argued over five percentage points of revenue splits. That’s $165 million dollars. The NHL claims to have lost $100 million just in the preseason, and losses of $240 million overall. Obvious to everyone but the NHL is that they’ve already lost more than they’re arguing over!

My personal solution – play the 2012-13 with a salary cap of $ $70 million. Both sides already agree on this. Play the season and negotiate an agreement on payment of existing contracts in full or with slight reduction with deferment, but play the games NOW!

Everyone loses if NHL games are not played this season. Owners lose ticket revenue, players lose salary, and both lose hockey fans which reduces hockey related revenue which is the measure of their payment. If it were possible, I believe the players should obtain this players’ option: “Should the NHL realize growth of revenues at the rate of 5% or greater on average over the term of this collective bargaining agreement, NHLPA shall have the option to extend this CBA for another term.” Since the owners have locked out the players in the last two labor disputes, this would protect the players from predatory negotiating tactics, not to mention the more important concern – the fans!